Top economists cheer falling price of oil and say higher US growth is on the way

The sharp drop in the price of oil is good news for the US economy and will result in higher growth over the next few years, according to a panel of top economists.

The IGM Panel of 41 distinguished economists was polled on this statement:

The recent decline in oil prices will promote higher real GDP in the US over the next couple of years.

Not one member of the panel disagreed while more than 60 per cent of the panel agreed with the statement, and 26 per cent agreed strongly. Some parts of the energy sector may begin to struggle, especially with Opec refusing to alter output, but the panel felt the economy as a whole is benefitting.

On Monday, oil fell to a six-year low after Goldman Sachs slashed forecasts. The banking giant cut 2015 forecasts for Brent crude to $50 per barrel (down from $83) and $70 per barrel in 2016 (down from $90). The price crash may have a negative effect on oil exploration, production and potential future oil exports.

Panel member Carol Hoxby of Stanford said:

The US economy remains strongly anti-cyclical in oil prices. Some industries suffer from lower prices, but they are dominated by winners.

Economics and finance professor Anil Kashyap said the decline in oil prices would act much like a tax cut for ordinary Americans but oil-producing states like Texas may take a bit of a hit.

Back in Britain, motorists are feeling the warmth of cheaper petrol despite the UK's notoriously high levels of fuel duty. On Monday, the big four supermarkets announced they would be slicing 2p off their petrol and diesel prices. Speaking in the aftermath of the price cut, RAC fuel spokesman Simon Williams said:

We are surely only weeks away from the milestone price of £1 a litre being a common sight at petrol stations up and down the country.